Black Hills Summer Vacation Rental

[Adam Walz]

Investment Info:

Single-family residence buy & hold investment in Custer.

Purchase price: $180,000
Cash invested: $80,000

My wife and I bought my dad's house as he decided to move away from the Black Hills. He converted an old 2br, 1ba property right in town and transformed it into a gorgeous 3br, 2ba home. He added a master suite and basically redesigned the entire flow of the house. We rent it out now as a vacation property in the summers and then family and friends also still get to use as well.

How did you finance this deal?

We paid cash for the down payment and buying all of the personal property so we didn't need to refurnish the home. Since we knew it would run a negative cash flow, the plan was to put more than the minimum down so we could pay it off more quickly. We are currently in the process of refinancing from 4% into a 2.5%,10 year loan since rates are sooo good right now. Game plan is to pay it off in about 6 years with our additional bi-monthly principal payments.

What was the outcome?

Will cash flow $780 after all expenses when mortgage is paid off, but more importantly we keep the property in the family for private use. More pics from the finished property: https://www.airbnb.com/rooms/35420095?s=67&unique_share_id=302032ba-c199-4870-9726-3a4540443ae8

Lessons learned? Challenges?

Had to learn everything about short term rentals from scratch! I had to read up on zoning regulations and permitting. Talked to our mayor about possible caps on vacation rentals. Researched different ways to manage the property remotely (I live in SF), assembled a great team on the ground (cleaner, handyman, lawn care, and snow removal). We have an amazing cleaner and it's made all the difference. Lucky to have had such great contacts since my dad lived there for years.